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ANNOUNCER: Tonight on CROSSFIRE, a soaring stock market, minimum wage war, and 1.3 million Americans dumped from unemployment. Which party wins when the economy is issue No. 1?

On the left, Howard Dean. On the right S.E. Cupp. In the CROSSFIRE, Hilary Rosen, a top Democratic strategist, and Kevin Madden, a top Republican strategist. As the gap between the rich and the middle class grows, who will get the blame? Tonight on CROSSFIRE.

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S.E. CUPP, CO-HOST: Welcome to CROSSFIRE. I'm S.E. Cupp on the right.

HOWARD DEAN, GUEST CO-HOST: And I'm Howard Dean on the left.

CUPP: In the CROSSFIRE tonight, two party strategists, at odds on the Obama economy.

In the new year, Democrats a problem, a big problem. They seem to think that they can have it both ways. They want to take credit for the surging stock market and small decline in unemployment, while at the same time rail against economic inequality. Push for a higher minimum wage and extend unemployment benefits.

The American people overwhelmingly think the Obama economy is in rough shape. Take a look at this. In a new CNN polls, two-thirds of Americans rate it poorly. President Obama can't take credit and dish out blame for the same economy. Conflicting messages don't work and won't work.

DEAN: But in fairness, S.E --

CUPP: Yes.

DEAN: -- this problem has been going on for 20 years, through Clinton, through Bush, through Obama. The lower 80 percent of wage earners in this country have not seen a real wage increase for 20 years. This is not a Democratic or Republican problem; this is an American problem.

CUPP: Fair enough. In the CROSSFIRE tonight, two CNN contributors and top party strategists: Democrat Hilary Rosen and Democrat Kevin Madden. Governor, as our guest host, I will give you the first question.

DEAN: Thank you for that.

CUPP: You're welcome.

DEAN: So the Republicans are always talking about tax cuts for the wealthy people, and this is always going to be trickle down. And everything is going to be helpful and fair. The Democrats are always talking about transfer programs and safety nets.

The truth is these have been tried for a long time, and neither of them have been terribly successful. It occurs to me that it may not be possible for a Republican solution to work.

KEVIN MADDEN, CNN CONTRIBUTOR: Well, look, again I think that those are two very different ways to describe what I think is a more substantive world view.

But I think, you know, one of the interesting points, I think, that was brought up in the introduction is this idea of blame. I think that's where this -- this issue is going to break down politically this year, which is the idea that Democrats are always looking to blame somebody in order to achieve some sort of better leverage in short-term economic gain -- I'm sorry, short-term political gain.

And I think Republicans, I think, are in a better position, and I think we've put together a better policy to help a lot of these folks when we're much more focused on the long-term benefits of growth and opportunity. And I think that's where we're going to see the big differences.

HILARY ROSEN, CNN CONTRIBUTOR: I don't actually see this as a blame game. I think President Obama actually wants to increase the minimum wage. I think Democrats actually want to increase the minimum wage.

If Republicans choose to be stupid and don't go along with it, then the blame is going to be from the American people to them. We saw just in the last two days, a CBS poll, Gallup poll. The American people overwhelmingly support an increase in the minimum wage. And so what you're going to have, I think, is the --

MADDEN: That's not going to solve --

ROSEN: You're going to have this interesting political year where Democrats are going to be talking about how do we help the middle class, how do we help the lower middle class and jobs and things. And all the Republicans are going to want to talk about is how do we prevent people from getting health insurance.

MADDEN: And that goes to my -- the point I just made. The Republicans are focused on the long term.

ROSEN: The Republicans have put nothing on the table.

MADDEN: That's not -- absolutely not true. You have bills that the House Republicans passed that are sitting in the Senate that haven't been acted upon. All of which address fundamental economic infrastructure, such as --

CUPP: Jobs, right.

MADDEN: -- trade. They have to do with energy infrastructure. They have to do with how we streamline regulations for small business so that they can flourish and grow.

ROSEN: And Democrats have corresponding bills.

MADDEN: So I understand why -- I understand --

CUPP: One at a time.

MADDEN: -- understand -- I understand the benefits of economic populism. It makes for very short-term -- as I said earlier --

CUPP: Yes.

MADDEN: -- short-term political benefits of it, but is it really going to address the fundamental problems that we have right now?

CUPP: No.

MADDEN: Even with income disparity or with -- or with job growth.

CUPP: Kevin, the math is on our side. The math of raising the minimum wage is not going to address the 2.5 or 3 million folks who actually make a minimum wage. And it's going to result in increased unemployment.

But Hilary and the governor are right: the politics is on your side. But here's my question to you.

MADDEN: Doesn't have to be, though. Doesn't have to be, S.E. I mean, Republicans --

CUPP: We try to explain it, but it doesn't seem to work. I mean, it's a tough -- it's a tough thing to break down economically and sell when you've got Democrats saying, "You don't care about the poor -- you know, you don't care about the poor."

ROSEN: Well, you know, I mean, let's just stipulate that none of us are economists, and economists believe, you know, multiple things on this issue. Some people say it's going to --

MADDEN: Name one economist.

ROSEN: -- kill jobs, and other people said it will stimulate jobs, because they're putting more money into people's pockets and therefore stimulating the economy.

But I totally agree with you on one point, which is there is no single solution for this very deep hole that, you know, more than 50 percent of Americans find themselves in now. MADDEN: And that's where I disagree --

ROSEN: Which is underemployed or being unemployed.

MADDEN: That's where I disagree with you on the rhetoric.

ROSEN: There's no one thing that will work, but we have to try multiple things.

MADDEN: But that's why I disagree with you on the political rhetoric. Because Democrats always go out there and demagogue this, and they say, "Republicans don't care about poor people; they're trying to keep people from earning more wages," when that's fundamentally not true.

And what Republicans are looking at is trying to earn and build the long-term economic growth --

DEAN: Kevin --

MADDEN: -- with fundamental reforms, because the minimum wage is not going to solve poverty.

ROSEN: Agree with one thing, do it, and then we'll start on the next thing.

DEAN: Kevin, you have to admit it is true that you guys have been branded as a party that doesn't care about ordinary working people. That's -- it may not be fair, but it's true. Because you're against minute millennium wage increases. You're against -- you cut the unemployment rates -- unemployment benefits right before Christmas and didn't put that in --

MADDEN: The Democrats didn't vote --

CUPP: And the president signed it.

DEAN: I'm not arguing about the merits. I'm just saying it is -- I think it's true --

MADDEN: It's a perception problem that the Republicans have.

DEAN: What are you going to do about it?

MADDEN: Well, I think there are a number of folks within the Republican Party who are doing a very good job of changing the Republican Party profile on this.

If you go back and you read the speech that Paul Ryan gave during the campaign out in Cleveland, where he talked about the need to change the way that we talked to people in the inner cities, how it is that we understand that economic opportunity is going to be built, not with the top-down government approach, but with a bottom-up approach that does -- that gives people the skills they need, that gives people the economic opportunities that they need to rise up the ladder.

And that's how you fundamentally change some of the income disparity problems that we see. I think just proposing a minimum wage hike is not going to do enough. And that's the debate.

DEAN: It's going to do something.

MADDEN: Also, for example, what do you believe -- what do you believe -- what do you believe we should raise the minimum wage to?

ROSEN: Well, you know, I would start with $9. I actually --

MADDEN: OK. Why not 12? Why not 12?

ROSEN: I would start with $10.

MADDEN: Why not 12? Why not 15?

ROSEN: Well, because I've read studies where people said that, in that $10-11 range, you've got, you know, enough small business support, but you still make a significant difference.

MADDEN: No, but why -- if it's going to solve problems with people's income, why not make it 15? Because there's a trade-off to the economy. When you raise the price of employment --

ROSEN: No one is saying that. But that's not an excuse not to do anything.

MADDEN: Why not -- if not 12, why not 15?

ROSEN: Because you're just being outrageous now.

MADDEN: No, because you won't -- what I want -- what I want is a concession. What I'd like is a concession that there is a trade-off on that, that --

ROSEN: There's a trade-off at some point.

DEAN: I think the reason the president --

MADDEN: No.

DEAN: The reason the president picked $10.10 is because that's what the minimum wage would be, had there been cost escalator since the last time it was raised. That's why he picked it. Is there a trade- off? Yes. Is there a trade-off at that level? Probably not.

CUPP: But let me just ask you this, Hilary. You know, income inequality, even though it's an important issue, has historically not been a vote mover. It just doesn't get people out to the polls. So I'm wondering if this is the Democratic big idea for 2014, raising the minimum wage. In a low turnout year, is that really going to get people out of the house?

ROSEN: Look, I don't know if there is any one thing. And I think that you're right on one point, which is, look, this could very easily go into a class warfare discussion, which will not help Democrats.

CUPP: Right. ROSEN: You know, because essentially, it's never helped in politics. Because people want to feel aspirational. They want to feel like they can move to the next socioeconomic class. But we've had such a stilted movement over the last 20 years that people have stopped dreaming that way.

And so I think what they do want to see is our politicians and our elected officials actually making an effort to understand what they're doing. So, to just simply say, "No, that's not going to work. Forget it, that's not going to work," is not going to help.

That's why -- where I feel like Democrats trying to put stuff on the table, trying to get out there, the president getting out there talking about this is going to be a political game.

CUPP: Should Republicans suck it up and go along with this minimum wage talk just to avoid the traps that they're talking about?

MADDEN: I think that we have to recognize -- I would like to see a very substantive conversation about some of the tradeoffs and some of the impact that it could have been, as far as taking some jobs away from those that are trying to grab onto that bottom rung of the economic employment ladder.

But I do believe that Republicans have to do a much better job of not just talking about this in the terms of clinical free-market economics.

CUPP: Yes.

MADDEN: Also do recognize that there are so many people out there that are hurting at the bottom of the economic ladder, and then talk directly to those people, in a very aspirational way, like Hilary said, about how -- how we can help them with the public policies.

CUPP: Good. All right. Well, so far we have yet to focus on the real elephant in the room. I know my Democratic friends want to avoid it, but when we come back, I'm going to ask Dr. Dean for his prescription to cure what's really ailing America.

Remember that bipartisan budget deal that Congress passed two days before the holidays? Well, some Republicans are already looking to upend it. They can't seem to handle the blowback in the tiny 1 percent growth cut in the growth rate in military pensions.

Let me explain this to you. Many of those, quote, "retirees" who are collecting pensions are in their 40s, earning another full-time living from another job. Now that these two-income earners are outraged, some Republicans in Congress who put bills in are caving in.

Somehow, benefits for the needy are seen as wasteful -- unemployment insurance, Food Stamps, increasing the minimum wage -- and Republicans wonder why they have an image problem.

So Kevin --

MADDEN: There you go again with the image problem.

CUPP: There you go again.

DEAN: Seriously, these guys -- these guys are caving in to a group of middle-class people who have their growth rates and their pensions cut, who have other jobs, and this is a $6 billion item over ten years. Yet these are the folks who say they want to reform entitlements, which are huge cuts. Why should I think the Republicans are even capable of reforming entitlements?

MADDEN: This is just simple constituent casework. In essence, this -- and I don't think this was geared towards Republicans. I -- I'll bet you all the Democrats that voted for it got the same blowback back in their district, and there's nothing like standing in a town hall getting that kind of heat that makes you change your mind when you come back to Washington.

So that's just the mechanic of how these -- this happens, how people change their minds in Washington. And it will be interesting to see whether or not it's just the atmospherics of a budget agreement that changes people and brings them together again to get a bipartisan deal or if something like this actually leads, again, to another opportunity for Republicans and Democrats to work together to solve a problem.

CUPP: Well, and Hilary, the elephant in the room, as I mentioned, is Obama care. And on Wednesday the chaos commences. Isn't that what Democrats are really going to have to run on? Whether they like it or not. I know you really want Democrats to run on minimum wage and income inequality, but I don't believe you're going to have a choice. You're going to have to deal with Obama care over the next year.

ROSEN: You know, I think there is a chance, a chance that by September, we're actually going to have stories where people who couldn't get insurance for the last 10, 15 years, you know, like two of my cousins at our holiday table, now because of preexisting conditions, now can get it.

There are so many benefits to this thing that have gotten lost in this trap of execution that, you know, it won't take much for enough people to tell some good stories. Now, does that mean that's going to undo everything and think about the money that's being spent to highlight the bad news? No, but it might just be a wash.

And then, Republicans will have to come up with something new.

CUPP: Well, there's some real problems, though. Premium hikes, I mean, there's a lot of unexpected bad news out of Obamacare, not just related to the Web site.

ROSEN: Premium hikes have happened for a time immortal --

CUPP: But it's supposed to be affordable.

(CROSSTALK)

ROSEN: It shows that premiums have actually risen less than they would have.

CUPP: Hilary, come on, you know what I'm talking about. The canceled plans, the doctors you can't see -- I mean, this thing has been a mess.

DEAN: So, this is the problem. So, this is to Hillary also. So, you're going to be advising some Democratic candidates. I think we have to have a positive narrative about Obamacare sometime around June, because September is too late.

ROSEN: Yes.

DEAN: The overhang is too long.

So, we've come through the Web site thing for the most part. And I think we're almost through with that. Now, we have a big backend with insurance companies. So, who knows who's going to have insurance?

And there are always going to be some people who aren't going to do under Obamacare. Most I agree will do well, what about those anecdotal cases? You know we're going to be in every attack ad all over the country. What would you say to your clients? How do you do this?

ROSEN: You know, I think nothing will work like a personal story. So, you know, I'm going to advise candidates to find the best personal stories they can in their districts, and, you know, promote the heck out of them because those stories are going to have an impact.

You know, one of the things that's not getting talked about a lot is this uneasy dance that the administration has been doing with the insurance companies here, because the insurance companies have known that they were going to have canceled plans. They've -- you know, they've been raising premiums for a long time, but in an effort to keep this sort of train moving forward, and on the right track, everybody is kind of looking at this uneasy alliance.

You know, going forward, though, if this thing doesn't get straightened out, it might just be that that, you know, that elephant in the room for so many years, making people want health reform was the insurance industry, they may go back to being the bad guy.

MADDEN: One of the big problems that you're going to face, the Democrats running in 2014, is going to have is that for every story that's a good one, there's going to be five that are very bad.

The premium hikes that are coming are also inside the context, through the lens of the disastrous rollout. So, many people -- whether or not those premiums were going up anyway -- they're going to attach it to Obamacare and the law's implementation. So, I think that becomes an increasingly big problem for them. And all the other mild (INAUDIBLE). We still have a business mandate that has yet to be implemented. It was delayed because the Democrats wanted to avoid the politics of it earlier. Now, they're going to have to deal with it head-on. And then you're going to have the rate hikes that come next year. Those are all big problems coming into 2014.

ROSEN: Again, I'll go back to this very point, which is -- I just don't think Republicans are going to succeed on just trashing something that's trying to make 40 million people lives better --

MADDEN: You know, I think --

ROSEN: -- without really an alternative that they articulate in any substantial way.

MADDEN: Well, that's --

ROSEN: It's going to be cold-hearted. It's not going to be effective. And I think unless there's another message from the Republicans, this issue could end up being a wash.

MADDEN: And there will be, and that's where I disagree with you.

So, you used the term earlier which is personalize (ph). I think Republicans are going to be able to personalize and localize this Obamacare. They're going to be able to go into their districts and talk about how -- this has dramatic altered the way people get their health care, the way they pay for their insurance and it's put the government between them and their doctor. I think that's something that's going to offer Republicans -- they're going to offer a counter- narrative, which is Republicans want to repeal this law and replace it with more patients-centric health care.

ROSEN: That may depend on the states.

MADDEN: It's going to depend on the states, of course, but the ability to localize it. Again for Republicans to talk about health care as a value, something that they care about and they have a better alternative plan, that's going to be --

CUPP: Well, Governor Dean, I mean, we're lucky to have you here tonight, you know a lot about this. What would your prescription to fix Obamacare be?

DEAN: I think they have to tough it out. I mean, in retrospect, obviously, it would have been better to have a public mandate -- public option, and not an individual mandate, neither one of which is in the bill.

But I do think that Kevin has actually outlined something that's going to get the Republicans into trouble. This bill is almost certainly not going to come between doctors and patients. And this is where Republicans slide. It is true that it's very volatile. We don't know what's going to happen. If I were the Obama people, I'd stick to what I was doing. I'd try to make this thing work right, because I think that you can count on the Republicans to step over the cliff and make the case too badly, and then when people find out it doesn't come between them and their doctors, it's going to be tougher.

MADDEN: But it's also -- it's already changing in how people, their networks, and whether or not their doctor's in network. So, it's already getting between them.

DEAN: That's partly true. The real reason for that, of course, is the insurance commissioners didn't do their job in the states. But that -- we're never going to be able to convince people that's what the problem is.

MADDEN: When you say one-size-fits-all federal standards, you kind of overlapping what the states can do. States used to be able to tailor their health insurance markets state by state, to unique health care population.

ROSEN: The one-size-fits-all federal standards are actually the popular provision.

DEAN: Right, that's the popular --

ROSEN: You can't be kicked out for a pre-existing condition. You can keep your kid on the plan. Women's health care doesn't cost more than men. So, that's --

MADDEN: But you do recognize --

(CROSSTALK)

ROSEN: Don't talk about this federal thing. Those are the things that actually if people knew and understood, they'd like.

MADDEN: Montana has a very different health care population from a state like New York. And what you've done is rearrange 1/6 of the American economy, in a way that says --

ROSEN: Montana has the ability to implement the plan the way they want to. If they don't want to do it, they can implement the federal plan. The states have an awful lot of discretion --

MADDEN: We used to have 50 -- we used to have state by state markets. Now, we have one centrally-planned market from the federal government.

We also want you at home to weigh in on today's "Fireback" question. Who do you blame for the widening income gap? Tweet Democrats or Republicans using #crossfire. We'll have the results after the break.

(COMMERCIAL BREAK)

CUPP: We're back with Hilary Rosen and Kevin Madden.

Now, it's time for the final question.

DEAN: So, here's the question to Kevin Madden.

Hillary Clinton has been named for the 12th year in a row as the most admired woman in America. And she's probably going to be the Democratic nominee in 2016, how does that make your party feel?

CUPP: This is when we're supposed to ooh and ah.

MADDEN: Yes.

(LAUGHTER)

MADDEN: Yes. I don't think it's going to stop them from making sure that they define her in 2014 very differently from how she defined herself in 2013 and 2012.

I have a question for you, though.

DEAN: Yes.

MADDEN: Would you primary her?

DEAN: No.

(LAUGHTER)

MADDEN: Yes, I was hoping that was a question you similarly weren't prepared for.

(LAUGHTER)

CUPP: Well, Hilary, my final question to you is -- while that's a lovely distinction, it's not a distinction that helped her win the presidency the first time. More good news for us.

Chris Christie is polling alongside Hillary Clinton a few years out. Does that worry you?

ROSEN: You know, since Chris Christie is spending all of his time attacking other Republicans instead of actually attacking Democrats, it doesn't worry me at all. I just figure let the Republicans get mad at him first and then we'll get our shot at it.

MADDEN: Do you guys regret not defining him in this last election more?

ROSEN: We -- there's plenty of time to --

MADDEN: See, spoken like a true oppo pro. DEAN: As somebody who's run, Chris Christie is going to be hammered by the press. He seems as the front runner, big story today in "The New York Times", not only did he supposedly close three lanes of the bridge to get back at the mayor of whatever it was, but now they found a professor whose programs he cut, the governor, out of some university, because the guy testified in the legislature.

CUPP: You're so mean.

DEAN: And he took away the security detail of the former governor who's a Republican. I mean, so --

(CROSSTALK)

ROSEN: One interesting thing, though, about --

DEAN: The press will do our work for us, it looks like. But they'll also do it to Hillary.

ROSEN: Democrats will not be hampered by 2016 politics, because our candidates are outside the Congress.

(CROSSTALK)

DEAN: That's true.

ROSEN: With Ted Cruz, with, you know, Rand Paul, with Marco Rubio --

MADDEN: You got one candidate.

ROSEN: -- the Congress, Republicans are going to be completely paralyzed to do anything because of their 2016 candidates are all in the Congress.

CUPP: Well --

MADDEN: Scott Walker disagrees. Mike Pence disagrees.

ROSEN: All he wants to do is criticize Republicans.

CUPP: And Mike Pence is my favorite. And I've said that before. Mark my words. We'll see what happens to Mike Pence.

DEAN: If you're the favorite of the Republican Party, you can count on "The New York Times" doing a big expose.

CUPP: Of course. I think he's pretty clean.

MADDEN: That's a guarantee.

CUPP: Who's someone that you admire?

MADDEN: Who I admire? Just in politics?

CUPP: Yes, sure.

MADDEN: I always have my great, deep admiration -- respect and admiration for Governor Mitt Romney and his family.

CUPP: Nice answer.

And, Hilary?

ROSEN: You know, Hillary Clinton's at the top of my list, but I'm also a protege of Dianne Feinstein, Senator Feinstein. I think those women exemplify the role models for women.

CUPP: You know what --

DEAN: I'm going to do the up and coming. My favorite, if Hillary doesn't win, Kirsten Gillibrand for president of the United States.

CUPP: Oh, wow. Something in my throat.

(LAUGHTER)

CUPP: Wow. Well, I think that Hillary's probably going to run, which will be fun to watch.

Thanks to Hilary Rosen and Kevin Madden.

Go to Facebook or Twitter to weigh in on our "Fireback" question, who do you blame for the widening income gap? Right now, 15 percent of you say Democrats, 58 percent say Republicans and 27 percent of you wrote in a third answer, blaming both parties. We have very smart viewers.

The debate continues online at CNN.com/crossfire, as well as on Facebook and Twitter.